Mining Spillovers in Chile

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

Chile’s small open economy with significant mismatch between the production and consumption
baskets may be represented by three stylized sectors, a commodity sector, a non-commodity
tradable sector, and a non-tradable sector. This paper estimates the effect of copper price shocks
on mining, manufacturing, and construction—each embodying a sector type. The empirical
findings are for positive spillovers from mining to the other two sectors. However, the estimated
size of the spillovers seems modest, which raises the question of the potential for mining to be
better integrated with the rest of the economy.